What is Nick Hodge’s “Montel’s Miracle” Stock?

Checking out the medical device teased by Early Advantage

By Travis Johnson, Stock Gumshoe, September 2, 2014

Nick Hodge has been focusing a lot on biotech-ish companies for his Early Advantage newsletter lately, and they usually end up being pretty early-stage stocks with good stories about some kind of breakthrough or unique compound or device and no real financials yet (meaning, little to no revenue or earnings) — just the kind of thing that can can get an investor’s imagination fired up.

So the preliminary warning is this: I’m about to tell you about a company that has effectively no financials, a small pile of cash, and a story. What you want to do with that information is up to you, of course… but stocks that are this small and this bereft of financial data don’t trade on fundamentals, they trade on hope, imagination, and stories. And you can’t know when the enthusiasm about a story will rise or fall.

But you’re all grown-ups (no one under 18 would have read this much text without jumping off to a cat video on YouTube, I presume), so you can make up your own minds. Let me explain what stock he’s actually talking about by walking you through his pitch.

The story is that Nick Hodge interviewed Montel Williams, the former TV talk show host who has Multiple Sclerosis and who was one of the patients who tested the device made by this “secret” company, with excellent results. The interview also included the CEO of the company, and Hodge runs down what the device does and how it will revolutionize treatment for all kinds of brain diseases as well as recovery from traumatic brain injuries. Here’s a snippet:

“… the newest investment opportunity I’ve been researching for my readers involves a groundbreaking medical device…

“A device that promises to forever change how we treat and cure brain diseases…

“A device that could improve — and extend — millions of lives… and make early investors ultra wealthy in the process.

“Montel Williams is one of the patients using this device, which was created by a group of Wisconsin scientists. He first read about it in a magazine article on an airplane.”

So that sounds intriguing, right? So what does the device do?

“This groundbreaking new treatment doesn’t involve any pill regimens…

“Any invasive surgeries…

“Or any agonizing therapies.

“It involves a tiny oral device designed to stimulate certain nerves in your brain through your tongue.

“This nerve stimulation helps treat brain disease in a way that’s never been done before.

“All the science shows it helps the brain to heal itself.

“This therapy is pain-free, easy, and quick — the typical session with a patient lasts about 20 minutes.”

Stimulating nerves on the tongue to help with brain injury? OK, sounds fairly wacky — but stranger things have worked. It does, at least, sound less scary than the deep brain stimulation stuff that researchers have been doing for decades now to try to treat Parkinson’s and other diseases — if only because the deep brain stuff involves, well, getting a little probe deep into the brain.

Here’s another explanation of what their device does:

“… there are thousands of tiny nerves on the tongue that connect to the brain.

“This group of Wisconsin scientists discovered that these nerves could help restore lost physical and mental function.

“So they created a miniature device you place on a patient’s tongue that sends specially patterned impulses to the brain.

“The patient bites down on the device while performing a 20-minute series of specially designed physical and mental exercises for his or her symptoms.

“This stimulation therapy works to repair the damaged areas of the brain.

“What makes this treatment so unique is that it doesn’t just target one specific brain disease but symptoms of multiple diseases….

“No other treatment on the market can both stop the progression of the debilitating symptoms of brain disease AND reverse them!

“The company has three patents pending on this breakthrough technology. So it can’t be copied.”

So what is this company Hodge is pitching? Here’s some more:

“… it’s been an emotional journey for Montel — especially considering he could barely stand before he started using the device four years ago.

“Now, Montel can jog on a treadmill. He’s swimming on his own and even heli-boarding.

“After 10 years of chronic and intense pain, this device is giving Montel his life back.

“And now it’s giving new hope to the 8.8 million people suffering worldwide from multiple sclerosis who are desperately searching for a way to get their lives back.

“As Popular Science writes: ‘Doctors observed patient improvement after a week of daily sessions with the device.'”

And the other big pitch in the story is that the U.S. Army has gotten involved, and has funded the FDA approval process to get this device to the point where they can use it for the thousands of soldiers who have brain injuries…

“The Army is completely funding the FDA clinical trials for the company’s tiny, life-changing device.

“And it could become one of the biggest medical stories of the century….

“But here’s the thing: Like all truly life-changing medical discoveries, timing is critical.

“In order to reap the biggest rewards from this medical advancement, you’ll need to act on this BEFORE results from FDA trials break…

“And BEFORE the company’s share price — which is currently trading around $3.00 — takes off like a surface-to-air missile.”

And all of this is fairly new, apparently:

“In February 2013, the Army signed a contract with this company, and the rest is history….”

And there is a wee bit of financial information in the ad:

“Currently, the company is forecasting $100 million in sales by 2018 and $140 million by 2019.”

So… who is it?

Nick Hodge is teasing a company that’s now called Helius Medical Technologies, which trades over the counter in the US at HSDT and has its primarily listing on the Canadian Securities Exchange at HSM (not the Toronto exchange or even the Venture exchange, this is a little upstart exchange in Canada). The basic info on them at their exchange is here, the operating company had previously been called NeuroHabilitation Corporation and came public through a reverse merger and private placement a couple months ago.

The shares are indeed below $3, they’re at about $2.25 as I write this morning but, since it’s a small and illiquid company with a market cap of under $150 million, it’s quite likely that Hodge’s attention could light at least a small fire under the stock — it hasn’t had much coverage anywhere else that I’ve seen, though the story has gotten quite a lot of popular attention over the last few years before they were a public company (it was in Popular Science and in Slate last year, and Montel Williams learned about them through a story in the American Airlines magazine back in 2010… and the story of the Army’s involvement in the research is told here).

Will it work out? Well, it’s hard to say — this is not the kind of thing that is likely to have a long and protracted FDA approval process or huge safety concerns, since it’s a noninvasive device that effectively is supposed to amplify physical therapy to inspire the brain to “heal itself” more quickly, but that doesn’t mean it’s necessarily a shoo-in — or that it’s going to be effective in large groups of people. I haven’t looked at any of the clinical results from the Army’s testing or seen anything other than the success story from Montel Williams (who helped create the company and is certainly an effective pitchman) or a few other YouTube success stories, and I can’t claim to understand brain injury or rehabilitative therapies to any great degree.

What I can see is a company that has very little communication with investors so far, because they’re brand new as a public company and went public through a pretty opaque reverse merger and a very off-the-beaten-path listing in Canada that was accompanied by what amounts to their initial public funding by private placement. So the company has about seven million dollars now, all of it raised over the Summer, and they say themselves that it won’t be enough to get them through next year so there will almost certainly be more stock offered for sale at some point (perhaps soon, if Hodge’s attention drives the price substantially higher).

That’s not necessarily a huge deal to worry about immediately, not when we don’t even really have any idea how the product will advance in clinical trials or what the market might be for it — really, if there are no fundamentals on which to build an investment case, as here, then diluting the stockholders by selling more stock should have a much less severe impact: You can’t dilute earnings or revenue per share, since they have neither and any guess at those future numbers is pretty silly if you’re going out four or five years, you can only dilute the story, and no one has a “story” button on their calculator.

So what we have now is a company with a market cap of just under $150 million, which is having some of its R&D funded by the U.S. Army but which is otherwise mostly spending money on R&D, mostly, it sounds like, through outsourcing arrangements to develop the next generation of the physical device — the current model is the Portable Neuromodulation Stimulator (PoNS) 2.2, it seems that they aim to go “commercial” with PoNS 4.0 in the next few years. The business model as of now is that they want to sell these devices for $2,500 each and have an ongoing service relationship for replacement tongue sensors and updated software for these devices that will be sent home with patients and used in daily therapy for several months, and that they will build a nationwide network of rehabilitation/physical therapy sites that use the device. That may well be a workable plan, but it’s awfully early to tell — and the clinical trials do not appear to have started enrollment yet as far as I can see (you can see the trials for PoNS registered at clinicaltrials.gov by searching “PoNS Device”, that search may be to restrictive but it only had one result for me, registered in 18 months ago but not recruiting).

So… that’s about all I can tell you. Nick Hodge is teasing Helius Medical, they do have a device that they use to stimulate the brain that appears to have at least helped Montel Williams and other patients with MS or traumatic brain injuries, and they’re getting some R&D support from the Army. Beyond that, you’ll have to decide whether you think this company is worth $150 million today — a decision that will be based almost entirely on whether you think both the device and their business plan will work, either of which is going to be a WAG (wild-ass guess) for most of us. Go forth, research it to your heart’s content, and let us know if you feel the urge to become a Helius shareholder because you think Hodge’s attention will drive the shares up, because it’s a great story, or because you’re convinced their PoNS device will be effective and profitable within a few years… just use the friendly little comment box below.


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36 Comments on "What is Nick Hodge’s “Montel’s Miracle” Stock?"

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modernrock
Irregular
234

Well done captain my captain………….

Ron Ames
Guest
0

Thanks Travis
I spent about two hours chasing this one down but never got past the Canadian symbol of HSM. Couldn’t convert that to OTC, but you did! Now I can put it on a long (very) watch list.
Ron

John Loren
Guest
0

What OTC stock symbol ? Please

Thank You , John

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takeprofits
Guest
0
I considered writing this up based on the fact that Travis was on holidays and might not get too it right away, but his dedication is evident by the fact that on returning he zeroed in on what may just be the hottest promo currently making the rounds. Identifying this stock was actually quite easy and there is not much that I can add except to note that the story goes back several years and while intriguing, not much progress has apparently been made, the only really positive point is the involvement of the U. S. Army with strong financial… Read more »
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William F Tilson
Guest
0
I will likely not be an investor because, unlike the 1% wealth royalty, I cannot afford a gamble that is large enough to make a real difference in my estate somewhere down the road, but I can say without equivocation, I hope that the device becomes a successful treatment for brain injury and/or brain disease, and the disabled soldiers who have gone to war at the behest of the 1% and paid so dearly for their bravery can someday afford the treatment and be allowed to repair themselves. God knows every one of us owes them whatever help we can… Read more »
hipockets
Irregular
1229

We owe all of them more than we can say. There are no words that are good enough.

E.T.
Guest
0
You must be psychic Travis as I was planning to write you today, (something I rarely do), to ask you to check this device out. Your right the Montel footage is moving. Yes its “too good to be true” seems to be in order and just last night I watched Dr. McCoy do his magic in an old Star Trek movie. However that said, having been in the “health care profession” (sic), for decades and having seen first hand the devastation of MS and Parkinson and other, even more rare diseases like Huntington Disease, I still hope for a game… Read more »
Carolyn
Guest
0
I agree w/E.T. Bought 500 shares today OTC. I bought the concept & nothing else. I’m 89 & have seen many, many, changes in life. While technology has provided efficiency in business, our daily life & novelty for some, I particularity like its contribution to the health & well-being of us. I have witnessed what would have deemed impossible & hence a miracle in my younger days. I am in good health but my 95 yr. brother old died a month ago w/Parkinson’s. Whether this company goes no where or is successful, I invested in the wish that it will… Read more »
Leonard S.
Guest
0

Did anyone notice the word “placebo” in the trials listing. It is known that many drugs are “successful” placebos. The device may be patented, but if it turns out to just be a placebo device, I am skeptical that it can have a lasting effect.

Malcolm Jensen
Guest
0

That would be one heck of a placebo effect; so great an effect that the device that enables the effect would be worth a lot of money. I’m in.

PromoBash
Guest
0

If someone other than Nick Hodges had written this, I might be interested. In my mind, he is the King of the Pump and Dump. I was severely burned by him when he promoted Premium Exploration, Inc. (PMMEF). I bought in to his sale pitch, but the stock has done nothing but nosedive since.

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SK
Guest
0
Well done Travis. …I own this stock! I met with the group when they were raising $6MM @ $0.50 . The subscription was completed in a week and was oversubscribed by approximately $1.6MM. The President/CEO, Phil Dechamps is an industry exec (bristol myers etc) and very conservative when giving timelines. He did say to me that he would rather surprise with results than disappoint with over enthusiastic chatter. This is ground breaking and lots of health care professionals are watching. US Army due dil was thorough and lead them to get involved (my understanding is they spend over $100MM per… Read more »
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Steve S.
Guest
0

Thanks again Travis. I was able to find this one on my own but it is interesting to see your take on this stock. Too much hype and not enough growth on this one from Nick Hodge. I am also a retired MD but I don’t see much future in this stock. The market for it is too small.

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SK
Guest
0

I disagree with your growth analysis. The market is actually very large. PTS and other brain related injuries and conditions aside, at least 5.3 million Americans, 2% of the U.S. population, currently live with disabilities resulting from TBI. Add parkinsons, MS, alzsheimers etc, the market has significant potential. If this device becomes part of a treatment protocol for brain related conditions or injuries, I see tremendous potential.

SK
Guest
0

I would encourage you to read “The Brain That Changes Itself” (NY Time best seller) Its a fascinating read. The first chapter profiles the Helius type science and the MD behind it.

louis broccoli
Guest
0

Even if this is proven to be effective it will never be approved and doctors will not be able to prescribe it because the pharmaceutical/ama cabal will kill it to protect their profits in prescribeable meds. So it is with all alternative meds.

jussmokey
Member
4

Like Carolyn I am interested because of several loved ones with Parkinson’s.
Thanks Travis for getting on this one so quickly.
A. Fazio

quincy adams
Guest
0

Does the device come in variety of flavors?

hipockets
Irregular
1229

Hmmm …wonder if it could fool the brain into thinking that you are eating pizza when you are really eating celery? Or drinking G&T when you are drinking water? Start-up Dieting Machines and Pub – another Gummy exclusive! :>)

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M D
Guest
0

Would like to speculate on this stock but there is not a bid or ask price indicated and my brokerage will not allow the trade….Any suggestions?
Thanks

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KennyG
Irregular
3530

On TDAmeritrade, they also did not show a bid/ask, but did show last trade price. I put a limit order in for that last trade price and it was filled. You might try that also.

Bill Olsen
Guest
0
I am a medical researcher and practitioner who has moved to Belize as way to many effective treatment modalities have been obstructed to protect big pharma interests.There is a high probability that this device will show significant results as it is actually a clever application of the soviet ritm-scenar. The significant difference is that the stimulation is done through the tongue rather than through the skin over the trigeminal nerve branches. This technology was developed to allow treatments in space without contaminating the recycle program with drug metabolites It is worth buying some stock IF you feel like trying to… Read more »
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Ross M
Guest
0

Royal Bank’s – RBC Direct Investing platform permits trading of HSDT. No bid/ask, but high/low trades and volume are shown. Their history on this stock only goes back to 6/30/14 and no company information is shown at all.

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baygreen
Member
30

That young 93 year old has the best mind of us all, and yet still keeps it an inspiration to us all if you every needed to Say, Holy

julie
Guest
0
i tried contacting the military for any info I am very disappointed. I was hoping this could be a device that can help my dad with parkinson’s. Anaywys, here’s what the reply email says: Hello Julie, Unfortunately, this study never started enrollment and has been administratively closed. Best of luck, Sara Murphy, MPH Regional Research Administrator Department of Otolaryngology (ENT) Naval Medical Center, San Diego 34800 Bob Wilson Drive Office 2K-10P2-CD San Diego, CA 92134 Office: 619-532-6820 Command Cell: 619-251-9535 sara.murphy.ctr@med.navy.mil —–Original Message—– From: Julie- Ace Metal Products [mailto:julie@acemetal.net] Sent: Friday, September 12, 2014 2:52 PM To: Murphy, Sara A.… Read more »
arch1
Irregular
7782

Julie Thank you for effort and info.

danyariv
Guest
0

I like yr writing style,
the surgical manner of the analysis of the facts and the clean cut conclusions

MD
Guest
0
Thanks for sharing this info. Saved me money not buying Hodge’s letter as well as the stock. I was looking all over to find more info on this device to try on my brother who is bedridden with MS. I was hopeful because it seemed a cheaper alternative to Stem Cell treatment which I am trying to get money together to have done in New York. If anyone is interested in a method which works, supposedly 33 out of 33 MS patients and 6 ALS patients who have had dramatic results take a look at IntelliCell BioSciences. I bought some… Read more »
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Di
Guest
0
I must admit I was extremely keen to buy some of this stock, especially as it sounds such a miracle to help sufferers of MS and Parkinson’s disease. Then reading the blogs about the pharmaceutical companies blocking advancement,and Julie who was told by the Army research dept that trials have been stopped “by Administration” was a real downer to me. Even if it didn’t make investors much profit, many would want to invest in something so hopeful for altruistic reasons. Now I am left wondering what to do, and if stem cell research would be an area more likely to… Read more »
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John loren
Guest
0

Anything New as of 11/19/2014

stephen schwartz
Guest
0

had a stroke 8 years ago caused by a clogged carotid artery. although relatively health
recpvery, an MRI shows damage to the brain which effects my balance and stability.
I was inpressed and am considering if acceptable to volunteer for a trial treatment, but
apparently not easy to achieve such status. I am also beginning to research stem cell
treatment.
recently read of a new York medical practice call Path medical, offering modern technology to treat patients. perhaps I can have an interview to see if they can help me determine the best way to proceed
Thanks for your research

Gr8Full!
Irregular
11347

Stephen my 94 year ol’ youngin and I take Lipo-Flavonoid for balance and tinnitus.
Best2ALL-Benjamin

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Jon loren
Guest
0

Stephan , Go for it !…I hear India has Top Flight Stem – Cell treatment

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